Viacom has pulled its 17 cable channels including MTV, Nickelodeon, Comedy Central, BET, VH1 and Spike off of DirecTV after the parties failed to negotiate a new carriage agreement. Unlike AMC Network’s current dispute with Dish, many more people watch Viacom’s networks, so it will be interesting to see who blinks first.

DirecTV claims that Viacom is asking for an increase of one billion dollars in fees and argues it is already paying Viacom hundreds of millions a year. To put the extra billion dollars in perspective, that amounts to less than $5/month more per DirecTV subscriber. That’s the wholesale price though, the retail markup would be higher.

Big corporations fighting over how to divvy up billions of dollars isn’t exactly a new problem. Carriage negotiations are nothing new either. But I’m sure the TV media establishment will spin this along with AMC’s squabble with Dish as a signs of an apocalyptic breakdown in the TV business model.

I always figured that the divvying of the pie was going to be an increasingly painful process. It effectively amounts to redistribution of revenue where some cable networks gain at either the expense of other networks or at the expense of the MSOs (Comcast, DirecTV, Time Warner, etc) or both. And of course at the expense of the subscribers. But it’s not like that hasn't been painful the last 20 years either. But in the past it has been uncommon for channels to actually to be pulled.

Things are more painful for DirecTV and Dish Networks these days. Their business model may not be completely broken, but it’s not as good as it once was. All the satellite companies really can compete on now is pricing. Everybody can catch up on technology. Remember when DirecTV was using “more HD than anyone else!” as a selling point? That lasted about 5 minutes. Meanwhile the cable companies have grown the hell out of their broadband Internet businesses, something that DirecTV and Dish aren’t well positioned to do and so growing their businesses is very difficult.

When content providers want to raise prices and all DirecTV and Dish can really compete on is price, passing along the price hikes to subscribers isn’t a happy proposition, but eating the price hikes without passing them along isn’t any fun either! So option “C” it is.

That’s no fun for the subscribers though and I don’t expect DirecTV to send its subscribers an announcement of “Bad news, good news! The bad news is no Snooki or SpongeBob, but the good news is we’re lowering your bills now that we aren’t paying the hundreds of millions of dollars a year we were paying before! Yay!"

Instead DirecTV has taken a very populist stance of “ Viacom thinks their networks are worth a billion more, then you have to be able to select what’s most important in your own living room. It’s your money, so you should be able to decide.”

That position will go over very well with a lot of people. I can’t fault Viacom for wanting to increase the percentage of its TV revenues that come from monthly subscriptions (vs. advertising). But it’s hard to find fault with DirecTV saying “screw that!” even if it’s spun as “power to the people!”

Jersey Shore won’t be back for a while and there’s plenty of SpongeBob on Netflix, so perhaps it’s not a bad time for DirecTV to play chicken and see how much of a ratings hit the Viacom networks take (DirecTV accounts for ~20% of the homes with cable channels). My guess is the Viacom channels will be back on DirecTV sooner rather than later, but it will be interesting to see how it plays out.

Viacom is just a typical example of the “we’re too important for you to not pay us lots more money”….I don’t know all of their 17 channels, so I might mis something…but i watch Nick at night sometimes, and comedy central less and less in recent months…and i dont watch any of the other channels listed in this post…wouldn’t be a loss to me, if i bother to pay for Direct TV…

James Cieloha

Every Directv customer should be ashamed of both Philippe P. Dauman and
Viacom for this blackout that result in the viewers from being able to
watch their favorite shows with Directv. I feel that Philippe P. Dauman
and Viacom are trying to be like the Neil Bogarts of Casablanca Records
fame of the 1970’s disco era, the David Smith (one of the Smith brothers
from Sinclair Broadcast Group), the Harry Pappas as part of the Pappas
Telecasting Companies, the Bernard Madoff’s, the Enron’s, the
Worldcom’s, the Adelphia’s, the Tyco’s, and the Martha Stewart’s, of the
2000’s by letting broadcast greed get out of control so all of the head
employees and bosses at Hearst to be able to enjoy carefree lavishly
spending to support carefree lavishly lifestyles with luxurious homes,
luxurious jets, luxurious cars, join luxurious clubs, and have other
luxurious items just to make them very happy then trying and willingness
to improve the quality of all the stations they owned and control and
making the viewers happy as well. I hope and I wish that Philippe P.
Dauman and Viacom get scolded by both by the ACA and the FCC for making
the viewers being forced to deal with this blackout because they could
not make a deal to get the stations back to it’s customers sooner and
with a fair deal with Directv. I hope and I wish that Philippe P. Dauman
and Viacom is barred from buying and owning anymore TV stations in the
future after their final decision to remove the stations from Directv. I
feel that Philippe P. Dauman and Viacom are trying to bribe like the
General Tire/RKO General of the 1960’s and 1970’s by not being very
honest of not only the viewers by making them miss the shows on Directv
and also on themselves. I hope and I wish that the FCC would force
Philippe P. Dauman and Viacom to allow Directv to carry it’s stations
without any interference for 12 whole years to meet FCC rules and
regulators. I feel that both Philippe P. Dauman and Viacom are way too
busy being the Rebecca Black Friday and Double Take Hot Problems as well
as trying be act like the Lyle and Erik Menendez’s as the greedy
murderers, the Jeffrey Ireland’s and the Patrick Jones’s as the drunks,
the Rodney Dangerfield’s, the John Belushi’s, and the Chris Farley’s as
the comedians, the John Robert Ewing’s and the Cliff Barnes’s, the
Charles Montgomery Burn’s, the Homer and Bart Simpson’s, the Peter
Griffin’s, the Garfield cats, the Cookie Monster’s, the Miss Piggy’s,
the Victor Newman’s of the broadcasting industry of not coming to reach a
deal with Directv to carry it’s stations to the viewers everyday. I
feel that both Philippe P. Dauman and Viacom are trying to turn into the
1919 Chicago White Sox’s baseball team and the Southern Methodist
University football of the 1980’s to force Directv to accept a take it
or leave it deal to carry it’s stations. I urge all of the viewers with
Directv to boycott both Philippe P. Dauman and Viacom right now for
making the Directv viewers suffer from being able to watch their
favorite shows.

Feedback

Is the percentage of Nielsen homes that have DirectTV public knowledge? Because if it’s a significant number, Viacom should be crapping their pants.

Joe

Let’s see, losing MTV…who cares! That network hasn’t been worth watching since the mid 1990’s. Losing Spike TV? No big deal. I have all the Star Wars movies. I can create my own monthly marathon if I want. As the article says about Spongebob, it can be watched via Netflix. Most shows these days are available online the day after it originally airs. Are consumers really losing anything right now with the Viacom battle? No, they are not. Dish network may be catching up to DirecTV for sales and HD channels and so forth, but the main factor for getting DirecTV is sports. If you are a sports fan, DirecTV is the ONLY way to go. Does TWC have the NFL package? No. Does Dish Network have the NFL package? No. Does Dish, TWC and AT&T provide the NBA, NHL, NFL and MLB networks (I said networks, not packages) as part of basic service? No. I’ve been with DirecTV for 12 years now and I have no intention of switching. I am more than satisfied with my service. I don’t care if I have to pay a little extra for my HD service. At least I know I will be getting HD channels all day, every day. I have friends who have Dish network and they tell me about channels losing the HD signal. So, this fight can go on for eternity. No loss to me.

http://tvbythenumbers.com Robert Seidman

@Feedback: it’s not the percentage of Nielsen homes, but a round number percentage of the Nielsen homes with cable channels in them. DirecTV has around 20 million subscribers. From the Nielsen perspective there are ~115 million homes TV homes, but the biggest cable channels are in only around 101 million homes.

MELVIN

AS MUCH AS I LOVE DISNEY CHANNEL FAR MORE THAN NICKELODEON, I DO FEEL SORRY FOR THEM

http://tvbythenumbers.com Robert Seidman

@Joe: DirecTV has the exclusive on the NFL package, and there’s nowhere else to go for that (even if many of the games are on broadcast networks locally and nationally).

NFL Red Zone is now widely available and the NBA, NHL, MLB packages (and MLB Network) are all available elsewhere besides DirecTV — I get all of that on Comcast. I’m not sure what’s available on Dish, but I’ll concede that when DirecTV competes directly against Dish it’s competing on more than just price.

This outage doesn’t bother me in the least. MTV is garbage programming for idiots and Nickelodeon can’t compare to the Disney Channel. I’m sure it will be back soon anyway, for those that care. Neither side can afford to have it last very long.

lethargic

So do our bills go down while some of the channels are gone?

If price is where DirecTV can compete with cable, why is my bill 170 dollars a month and the only extras I get are HBO and Showtime?

GARebelman

Viacom forces Directv to throw all their channels on one package. I only watch Comedy Central from that long list of 17. I’m on Directv’s side. Viacom is known for its greed.

RHONJd

I’m sure this will be over and done with, by like…tomorrow. They will reach an agreement veryyy soon. Trust me.

lethargic

I like when people pick and choose which greedy scumbag corporation is the greediest.

Becky

This must really suck for the advertisers too. Without Nick, how will my children know that they need a Slushy Magic, PillowPets, Stompee Slippers and some Snuggle light thing?

Chase

How am I going to get fully torqued now??? VERY LOOSE BUTTHOLE viacom, now I can’t watch my weekly new Workaholics…

Aya Reiko

Interesting spin on the viewership.

Sure, *combined* it may seem big, but go to the “Cable TV Network Weekly Ratings” page and note that every Viacom network named in the first sentence is *on the bottom*.

Dan

I CAN’T WATCH FRIENDS ANYMORE. WTF.

http://tvbythenumbers.com Robert Seidman

@Aya:Nickelodeon was #2 in total day average viewership (NAN, Nick at Night is considered a separate network for Nielsen purposes in primetime). some of the rankings in primetime are a function of what was on (or not on) last week (eg MTV would have fared better last week if Jersey Shore was on), but…you’ve still got a point and I’m sure it’s not lost on DirecTV